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Kamran Masteri works with a model of a voltage control flywheel system at Ryerson University’s Centre for Urban Energy. The university launched the centre two years ago with $7-million in contributions from Hydro One, Toronto Hydro and the Ontario Power Authority.Moe Doiron/The Globe and Mail

When billionaire entrepreneur Ned Goodman announced a major gift this week that will stamp his name on Laurentian University's new School of Mines, he made it clear how he wanted it spent: directly on student experiences, and not on the school's fixed costs.

Mr. Goodman's gift (the amount was not disclosed) will go toward a $20-million endowment for the school, which will fund bursaries, scholarships, study abroad and career placement opportunities, and identify possible new degree options in areas of industry demand. The Dundee Corporation chief executive officer will have a seat on the school's Global Advisory Council, which oversees how endowment funds are spent, but has no say over hiring or curriculum.

Laurentian, in Sudbury, has watched other Ontario universities face harsh criticism over donor agreements deemed by some to give private funders too much sway over academic matters. President Dominic Giroux hopes Mr. Goodman's advisory role will keep him connected to the school while respecting academic boundaries.

"[The agreement]… is a useful construct which avoids getting into research integrity matters or academic freedom, but also allows industry to know tangibly the impact of their investment," Mr. Giroux said.

In September, mounting backlash over excessive donor involvement prompted dozens of academics and administrators to gather for a one-day conference in Waterloo aimed at coming to grips with the new realities of private-sector funding. In a climate of limited resources and rising costs, Canadian university leaders are seeking deeper ties with business and wealthy individuals to help launch new initiatives and provide enriched student experiences. Private partners, however, have increasingly demanded ongoing input in how their money is spent, presenting universities with ethical questions.

"Donors are less inclined to give an undirected gift than ever before," said Nicholas Offord, a fundraising consultant and former executive director of development at Montreal's McGill University.

"The conversations now are much more about, 'How can I help the university address important social causes that matter to me?' "

Business has had a foothold on campuses for decades, with corporations funding contract research by professors on projects of mutual interest. Firms tapped technology transfer offices established by universities to help professors take inventions to market. And their donations have put corporate brands and donor names on everything from lecture halls to research chairs.

In the past, those relationships were typically executed at arm's length, insulating academics from donors' interests. The deals struck today are often more complex, the donors less passive, and some schools have landed in hot water in their eagerness to do new things, and to keep benefactors from taking their precious dollars elsewhere.

Most recently, Carleton University in Ottawa felt compelled to rewrite an agreement that gave representatives of Calgary businessman Clayton Riddell, who pledged $15-million in 2010 to launch a graduate degree in political management, power over hiring for the program.

In April, faculty opposition killed an agreement between Toronto's York University and the  Centre for International Governance and Innovation to fund study in international law. And Waterloo University and Wilfrid Laurier University, both in Waterloo, Ont., may face a rare censure from the Canadian Association of University Teachers (CAUT) over the governance of the Balsillie School of International Affairs.

"If a university is to fulfill its public function, it has to operate in its teaching and in its research based on scholarly criteria, not on third-party interests," said Jim Turk, executive director of the CAUT and the most vocal critic of the disputed contracts.

"Insofar as universities are beholden to powerful interests, to what's politically popular … we would be in terrible shape as a society."

Some schools have tiptoed the line successfully. Toronto's Ryerson University launched its Centre for Urban Energy (CUE) two years ago using $7-million in contributions from three partners – Hydro One, Toronto Hydro and the Ontario Power Authority – and is now hoping to enlist new collaborators such as Siemens and General Electric.

Professors and students have more than a dozen projects under way. Many stem from proposals made by the industry partners, but faculty can pitch their own ideas, and either side can refuse projects. The energy companies have seats on the Centre's advisory board, but have no say in hiring.

The CUE's first finished project was for Mississauga-based Temporal Power, developing an efficient flywheel for storing energy mechanically with many possible applications, including collecting energy at off-peak hours to use at times of high demand.

"The research is being done by the academic community, but it's being driven by industry need," said Dan McGillivray, the CUE's executive director.

Initiatives such as Ryerson's are partly a response to pressure from provincial and federal governments that are steering universities toward research with immediate applications, earmarking ever more money for public-private partnerships. The most recent federal budget redirected $37-million in funds for granting councils – such as the Natural Sciences and Engineering Research Council – toward industry-academic collaborations.

And as the ranks of research-focused professors and graduate students grow, competition is fiercer than ever.

Universities also face a perennial budget squeeze. The proportion of operating revenue covered by governments has fallen by 26 per cent over three decades, and public spending continues to tighten. Tuition fees rose steeply to fill the gap – they now account for 35 per cent of operating funds – but student push-back against rising fees is growing.

These conspiring pressures may help explain some universities' sudden willingness to grant wealthy private partners a degree of control that has alarmed academics. To pre-empt future flareups, the Council of Ontario Universities has formed a working group of university vice-presidents to determine best practices in negotiating new partnerships.

At the Waterloo gathering, the sharpest exchanges came when Mr. Turk debated former University of Saskatchewan president Peter MacKinnon. Since its inception in 1907, USask has existed partly to help build Western agricultural industries. "For many faculty members, collaboration with industry is not optional or peripheral. … Think of the professor of crop science who wants to pursue new crop varieties," Dr. MacKinnon said, arguing the CAUT has been unduly suspicious and protective.

"The line may be, from time to time, a subtle one to draw, but it's the nature of the enterprise that it has to be drawn," he said. "If you have to say to donors, 'You have no say, not even advice in these matters,' if that's the message, then the donors will indeed head for the hills."

Follow James Bradshaw on Twitter: @jembradshawOpens in a new window

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